Financial services are the activities that put money to productive use. People can give their savings to intermediaries who might invest them in the next great technology or allow them to buy a home. Those intermediaries can also provide important safety nets, shielding consumers from the risk of health care costs or property damage. Regulatory bodies are charged with safeguarding savers’ assets and preserving the trust that underpins all financial services.
Many people associate the term “financial services” with banks, but there is much more to this sector than just deposit-taking institutions. The sector comprises thousands of depository institutions, providers of investment products, insurance companies, credit and financing organizations, and the critical financial utilities that support them all. Financial services intermediate the flow of cash between savers and borrowers (investment funds, commodity assets, securities, loans, mortgages, etc.) and redistribute risk by aggregating and monitoring the performance of investments, pools of borrowers (so that banks are not crippled if one or two fail to pay), and insurance policies.
In addition, financial services are the industry that provides vital tools for businesses to operate and grow. This includes the infrastructure that enables monetary transactions to be made, such as payments and settlement systems; money-broking and treasury services; clearing and custody services for financial instruments; and other auxiliary financial services (such as advisory, intermediation and information).
It is difficult to imagine modern economies without a healthy financial services sector. It allows individuals to obtain the loans they need for homes, cars and education, helps them save for retirement and other goals, protects their property and health through insurance, and enables businesses to thrive by providing them with essential capital and financing.
Careers in the financial services industry tend to be highly respected and rewarding. This is because the firms that make up this sector invest heavily in their employees, ensuring they have the skills and training needed to succeed. They are also known for promoting from within and favouring aptitude over tenure, making this an attractive sector for younger candidates who want to move quickly up the ranks.
Entry-level roles in this field are usually relatively low-paid, but the industry is notorious for paying generous bonuses to high performers. After a few years in a role, salaries can reach the five-figure mark or more, depending on the job type and company size. Those who work in this field are often expected to be quick-thinking and adept at using new tools and technologies, as the landscape of finance changes rapidly. Having an effective network in this field is also important, as the success of each individual is heavily dependent on the connections they have with other professionals. The good news is that financial services companies understand the value of networking and often encourage their staff to engage in this activity. This can help them build relationships with other employees and business partners, which may open doors in the future. As well as enabling them to find the best possible solutions for their clients’ needs.